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Clusters and the development of supplier networks for transnational companies

Clusters and the development of supplier networks for transnational companies. Magdolna Sass, Institute of Economics of HAS Miklós Szanyi, Institute for World Economics of HAS. Cluster concept. Aim: enhancing global competitiveness at regional level

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Clusters and the development of supplier networks for transnational companies

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  1. Clusters and the development of supplier networks for transnational companies Magdolna Sass, Institute of Economics of HAS Miklós Szanyi, Institute for World Economics of HAS 12th General Conference of EADI, Geneva, 24-28 June, 2008

  2. Cluster concept • Aim: enhancing global competitiveness at regional level • Core: cooperation on various corporate functions (slaes, purchase, training, innovation logistics, marketing…) • Tools: shared use of cluster services, personal and informal contacts, knowledge generation and distribution size increase joint appearance 12th General Conference of EADI, Geneva, 24-28 June, 2008

  3. Cluster features • Regional concentration of activity • Sectoral focus (traded clusters) • Heterogenious structure of participants • Cooperation and competition • Innovation (knowledge generation and sharing) • Critical mass (size, financial independence) • Life cycle 12th General Conference of EADI, Geneva, 24-28 June, 2008

  4. Suppliers • Main form of relationship between companies with foreign participation and local companies • One of the main channel for spillovers • Can be perceived as clusters(lower level) • Base for deeper and closer cooperation between companies • Relatively low level in Hungary(a supplier relationship with an affiliate has beenexpected to „restructure” or induce to restructure domestic companies, raising their productivity, competitiveness etc.) 12th General Conference of EADI, Geneva, 24-28 June, 2008

  5. Factorsinfluencing the share of local supplies in total inputs • Mode of FDI entry • Sector • Export-oriented versus domestic market oriented • Gap (level of difference) between the „domestic” and „foreign” sector • Age of the investment • Quality of (potential) local suppliers • Nationality of the investor • Global strategies of TNCs • Affiliates’ role in global TNC network 12th General Conference of EADI, Geneva, 24-28 June, 2008

  6. Clusters from supplier networks? • Privatization vs. greenfield: not highly relevant (clustering is new phenomenon) • Sectoral affiliation (traded clusters) most globalized (mobile) industries • Participation most likely who paid attention to supplier network development (until now little TNC involvement) • Unprepared local participants (lack of trust, short term horizon) • Clustering is more complex and difficult issue • TNCs’ involvement over time: proof of benefits of clustering • Eminent role of social capital building, role of potent cluster management 12th General Conference of EADI, Geneva, 24-28 June, 2008

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